EUR/GBP Exchange Rate Falls on ‘Light at the End of the Tunnel’ for UK Economy
The Euro to Pound (EUR/GBP) exchange rate dipped today, with the pairing currently trading around €0.895.
Sterling rose today after the Bank of England’s (BoE) Governor Andrew Bailey was a notably upbeat at The City UK National Conference today.
Mr Bailey said that there is now ‘some light at the end of the tunnel’ for reducing the nation’s economic uncertainty.
Mr Bailey added:
‘Since we published our report, we have had encouraging news on the vaccine front. Of course, there is a lot to do, and important steps to take and evidence to gather, but this is a big step forward, and it will play a major role in lowering the level of uncertainty. So, let me thank those in businesses, universities, government and the NHS who are pushing this vital work forward at such impressive speed.’
As a result, GBP investors have become more optimistic about the British economy, though it has been beset by caution as Brexit and Covid-19 remain obstacles.
Today also saw reports that Downing Street could be in the process of reviewing England’s Covid-19 restrictions.
Robert Jenrick, the UK Conservative MP, commented:
‘[I]t is too early to say which tiers people will be able to go into. But we all want to see a significant easing of the measures in all parts of England at the beginning of next month.’
Euro (EUR) Dips as Hungary and Poland Veto EU Budget
The Euro (EUR) suffered this week as the Eurozone’s economic future remains uncertain after Poland and Hungary vetoed a seven-year EU Covid-19 budget.
Consequently, demand for the single currency has slipped as the EU faces further internal squabbles amidst a rising number of Covid-19 cases throughout Europe.
German ambassador Michael Clauss warned that the EU could face a ‘serious crisis’, adding:
‘We have already lost a lot of time in view of the second pandemic wave and the severe economic damage.’
This week also saw a sharp rise in Covid-19 deaths in France.
As a result, this has sparked further concerns for the Eurozone’s economy as several its largest economies struggle to curb the spread of the virus.
EUR/GBP Outlook: Could Fears of a No-Deal Brexit Send the Pound Tumbling?
Euro (EUR) traders will be awaiting tomorrow’s release of the Eurozone’s Consumer Price Index for October.
Any signs of a struggling European economy would prove EUR-negative.
Meanwhile, EUR investors will be monitoring Europe’s Covid-19 situation. If this appears to be worsening, then we could see the EUR/GBP exchange rate fall.
Brexit debates will continue to drive the Pound, however, so we could see Sterling suffer if a no-deal Brexit seems more likely.